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Singapore’s GIC sells about half of remaining stake in UBS at a loss

Singapore sovereign wealth fund GIC announced Tuesday it had sold a 2.4% stake in UBS AG at a loss.

CEO Lim Chow Kiat said in a news release that “GIC made the UBS sale despite the loss because conditions have changed fundamentally” — since GIC completed a more than $10 billion investment in UBS in February 2008 at the start of the global financial crisis — “as have UBS' strategy and business.”

At the time GIC made that investment, executives there expressed faith in the long-term prospects of the UBS franchise.

“We made this significant investment in UBS because we have confidence in the long-term growth potential of the bank's businesses, particularly its global wealth management business,” said Tony Tan Keng Yam, GIC's then-deputy chairman and executive director, in December 2007.

Mr. Lim said in Tuesday's statement, “It makes sense now for GIC to reduce its ownership of UBS and to redeploy these resources elsewhere.”

A UBS spokesman in Hong Kong declined to comment.

GIC spokeswoman Jennifer Lewis pointed to the new investment framework GIC adopted in 2013, focused on cost of capital and opportunity costs when allocating capital, as a factor driving Tuesday's decision.

GIC didn't reveal the loss it incurred on the sale of that 2.4% stake, which at current market prices was valued at about $1.5 billion. GIC spokeswoman Mah Lay Choon, in an email, said GIC would offer no further details beyond its public statements.

The sale reduces GIC's stake in UBS to 2.7% from 5.1%.

The news release noted that the positive return on GIC's other big investment at the time of the financial crisis, its $6.88 billion investment in Citigroup, has more than offset its UBS-related losses.

The release said while “GIC is disappointed that the UBS investment resulted in a loss … the combined return on the UBS and Citigroup investments has been positive in mark-to-market terms.”